Kota Kinabalu: As of October this year, a total of 235,908 individuals were declared bankrupt in the country, said the Director-General of Insolvency Department Datuk Abdul Karim Abdul Jalil.

He said based on the records of the Malaysian Insolvency Department, the main causes for bankruptcy were hire-purchase agreements (26 per cent), followed by personal loans (21 per cent), housing loans (14 per cent) and other loans including business loans and corporate guarantees.

"This places Malaysia among the countries with a large number of bankruptcies compared to the other countries, with an average of 41 individuals declared bankrupt each day," he said.

Between 2005 and October this year, a total of 14,000 cases were discharged of bankruptcy at the discretion of the Director-General of the Department of Insolvency, Abdul Karim told reporters after opening the dialogue on insolvency at the Federal Administration Complex in Likas, here, Tuesday.

The discretion refers to the bankrupt individual paying back the loan on instalments continuously for more than five years and that they offered close cooperation with the Department of Insolvency.

Abdul Karim said the Government was reviewing the Malaysian Bankruptcy Act 1967 in efforts to assist those who were declared bankrupt to continue with life without the debt burden, including automatic discharge.

Under proposed amendments to the law, bankrupts will soon have an opportunity to start anew after five years

Debtors will have a lot of reasons to smile once proposed amendments to the law are passed to enable bankrupts to be discharged automatically.

It is learnt that under the amendments, bankrupts may be automatically discharged after five years without having to apply to the courts or wait for the approval of the director-general of Insolvency (DGI), to be freed of the social stigma.

The Insolvency Department is seriously considering this move -- which is practised in many countries -- to give bankrupts a second chance to start anew.

The automatic discharge was proposed as the department believes making people, especially those who are honest and credible, a bankrupt for life will not benefit anyone.

"In many cases, it does not help them or their creditors as some of these people really cannot nor have the means to settle their debts.

"Some debtors are also untraceable. So what's the point of having them in our statistics? An automatic discharge will help them get back on their feet and start life afresh," DGI Datuk Abdul Karim Abdul Jalil told the New Sunday Times.

However, he said, many issues needed to be looked into.

"Should any conditions be imposed before this automatic discharge procedure is applied, especially to the dishonest and non-cooperative bankrupts? Or can the creditors or the DGI raise objections in relation to the conduct of the bankrupt? These are matters we have to thoroughly look into."

Several countries, including Thailand and New Zealand, have laws which allow for the automatic discharge of a bankrupt after three years as long as the bankrupt is not involved in fraud.

In Canada, a first-time bankrupt is automatically discharged after nine months if he fulfills all his duties and does not have any excess income. In the United Kingdom, bankrupts may be discharged after a year.

Karim said the automatic discharge was among the proposals under amendments to the existing laws to create a single Insolvency Act.

The proposed amendments have been submitted to the attorney- general.

At present, apart from paying their debts in full to qualify for a discharge, bankrupts in Malaysia can also be discharged at the discretion of the DGI.

This was made possible under amendments to the Bankruptcy Act in 2003 which gave the DGI the authority to discharge a bankrupt after five years or more.

Previously, bankrupts could only be released by the court if they paid their debts in full or if they were wrongly declared a bankrupt.

The automatic discharge proposal was mooted in 2003, but the authorities then felt that it was not the right time to introduce it.

"So, we introduced the Certificate of Insolvency instead which gave the DGI the power to discharge a person after five years or more, subject to objections from the creditor.

"And we used this certificate to save credible entrepreneurs, such as those who became bankrupt due to the economic crisis and not because of their own folly."

Since then, the department has discharged 14,174 bankrupts based on their good conduct and cooperation.

"We had also discharged extremely poor people and the sick.

"Through our outreach programme, we had personally witnessed their condition.

"Some of them were so poor or sick that they could not even make ends meet, let alone repay their debts. In such cases, we released them from bankruptcy because it would benefit no one for us to continue administering their files. Instead, it may incur us unnecessary costs."

Karim said it was necessary to streamline insolvency laws in Malaysia, such as personal insolvency (under the Bankruptcy Act 1967), corporate insolvency (which comes under the Companies Act 1965) and other related laws for a more efficient administration of insolvency cases as many of the laws now overlapped with those of other agencies.

For example, although the DGI is the official receiver and liquidator of companies, which have wound up and societies and trade unions which have been de-registered, laws pertaining to these matters are still parked under the Companies Act 1965, Societies Act 1966 and Trade Unions Act 1959, which come under the jurisdiction of the respective agencies.

"The international trend now is to put all this into one legislation to be administered by one organisation.

"We don't want the functions to overlap.

"We need a more effective and innovative insolvency administration system to create a new insolvency landscape in the country. Without doubt, an effective and innovative insolvency system will contribute tremendously to a country's financial stability."

He said on an average, 41 individuals were declared bankrupt every day.

Most of the bankrupts had defaulted on the payment of their car loans.

You need a letter from JIM allowing to open an account for your earnings. They will give but dispose what ever assets you have immediately and remain silent after that. You have to be smart and brave to encounter all these. All the best.

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answered on Jul 30, 2013 at 04:29by debtor

edited Jun 22, 2016 at 04:36

@guarantor

What type of assets will Jabatan Insolvensi Malaysia (JIM) sell?

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answered on Jul 30, 2013 at 06:45by guarantor

edited Jun 22, 2016 at 04:37

You don't have to tell anybody what you sold. You need the money to move on.

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answered on Jul 30, 2013 at 16:18by Bonked

edited Jun 22, 2016 at 04:52

Jabatan Insolvensi Malaysia (JIM) will take possession of whatever you own which is sellable! So sell while you can... you will need it.

When I query why are we are charged so much for traveling (of course at the company expense and on DUTY only). Their reply, "You get allowance for oversea travel so you can offset these charges with it!"

OMG! To all bankrupts out there who needs to travel in your line of duty... practice begging at least a month before your overseas assignment because YOUR OVERSEA FOOD ALLOWANCE ARE ****ED DRY BY JIM!

When I see the TV ad... it was really disgusting! Have a heart JIM... we really needed your help. We didn't choose to be what we are.

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answered on Aug 1, 2013 at 06:18by bank zzz

edited Jun 22, 2016 at 04:53

Maybe those owing less than RM100,000 should be auto discharged within one year. Above RM100,000 to RM250,000 two years, and so on. Guarantors are included. Many of such people will be able to be freed from bankruptcy. Their credit rating will be affected.

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answered on Aug 3, 2013 at 01:24by Victim

Natasha,

Draw all your $$ out immediately. They will not give you notice before taking your $$ then close your account. They are so heartless !

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answered on Aug 3, 2013 at 03:50by bank zzz

edited Jun 22, 2016 at 04:54

@Natasha

Within the first one year what action has been taken against you after bankruptcy?

Nothing as yet. Just happen to know when the bank agent once called me about paying the remaining debt. When I called the bank they said that bankruptcy has been filed against me and I has been declared bankrupt a year ago.

I guest all letters does not reach me because the old address were used. That one year ago I don't have any cars or house under my own name because I just came back to Malaysia like a few months, but at that time I am already working and receiving my salary via my bank account.

By the way, does freezing the account means the money will also be taken & not only "freeze" the account.

I read that we can actually request that the account be un-freeze if it is for salary purpose?

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answered on Aug 12, 2013 at 19:43by Penjamin teraniaya

edited Jun 22, 2016 at 05:25

@Guarantor or whoever can advise,

I am a guarantor or 'penjamin' for hire purchase and did not get cooperation or 'kerjasama' from the borrower. Currently I'm in midst of negotiation with bank to allow minimum payment to settle, as a guarantor. How did you get 'pelepasan' from insolvency to do direct payment to other unaffected banks as usual? I have asset - house under my name which I have to pay ontime. My other commitments have no due, except this stupid borrower's loan.

My Proof of Debt (POD) was much higher than the borrower. I almost fainted when I heard. My appeal letter received acknowledgement and under investigation. I am willing to find the money to pay if they give me minimum. However, worst case I have to think how to save my asset and car if going thru bankruptcy. The bank said, I can write a letter to Putrajaya to request for pelepasan to make direct payment to other banks, as those banks are not affected.